Cryptocurrency is legal and regulated in Bahrain. The jurisdiction has a comprehensive, dedicated crypto framework with licensing and active enforcement. Central Bank of Bahrain’s Crypto-Asset is among the 4 regulators with oversight. The FATF Travel Rule is adopted. Tax treatment: No personal income tax.
Derived from 558 sourced facts for Bahrain · last updated · primary sources
Bahrain operates a dedicated virtual asset licensing regime anchored in the Central Bank of Bahrain Rulebook—specifically Module VA (Virtual Assets) and Module CRY—requiring CBB authorization for any entity providing crypto-asset services, with Decree-Law No. (36) of 2025 updating the AML/CFT and KYC framework and Decree-Law No. (4) of 2001 establishing the foundational AML/CFT statute. Licensed VASPs are supervised by the Central Bank of Bahrain and must fulfill mandatory CDD and five-year record-retention requirements, implement the FATF Travel Rule for cross-border transfers, screen customers and transactions against UN and Bahraini national sanctions lists, and comply with strict client asset segregation and trust-arrangement rules under Module CRY. Algorithmic stablecoins are implicitly excluded from permissible operations, as the reserve-asset and segregated-custody requirements for asset-referenced tokens cannot be met by unbacked or volatile-collateral models. (cbb.gov.bh, nbr.gov.bh)
Under the Central Bank of Bahrain’s Crypto-Asset (CRA) Module, a full crypto-asset exchange operator (Category 4) must maintain a minimum paid-up capital of BHD 300,000 (approx.
UN Sanctions Lists: Specifically the Consolidated List maintained by the UNSC 1267/1989/2253 ISIL (Da'esh) & Al-Qaida Sanctions Committee and the UNSC 1988 Taliban Sanctions Committee List, as well as other relevant UN sanctions lists.
UN Sanctions Lists: Specifically the Consolidated List maintained by the UNSC 1267/1989/2253 ISIL (Da'esh) & Al-Qaida Sanctions Committee and the UNSC 1988 Taliban Sanctions Committee List, as well as other relevant UN sanctions lists.
Monitor and Report: Implement robust transaction monitoring systems to identify suspicious transactions and report them to the Financial Intelligence Directorate (FID) of Bahrain.
Can specific business models operate in Bahrain? Each card answers the operational question for one kind of operator. Curated cells reflect counsel-grade review; AI-generated cells should be confirmed before relying on them.
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AI · UnreviewedCBB — Crypto-Asset Service Provider licensing (4 categories), prudential supervision — first MENA jurisdiction with comprehensive crypto framework (2019)
Central Bank of Bahrain (CBB) Official Website: https://www.cbb.gov.bh/
The Central Bank of Bahrain’s regulatory requirements are contained in the multi‑volume CBB Rulebook, which is accessed via the Laws & Regulations section of the CBB website (with detailed modules hosted on the linked Thomson Reuters Rulebook portal), rather than a single static URL such as https://www.cbb.gov.bh/cbb-rulebook/.
Bahrain’s primary AML/CFT statute is Decree‑Law No. (4) of 2001 on the Prohibition and Combating of Money Laundering and Terrorist Financing, as amended, most recently by Decree‑Law No. (36) of 2025.
Law No. (4) of 2001 with respect to the Prevention and Prohibition of the Laundering of Money (as amended): This is Bahrain's overarching anti-money laundering law, which defines ML/TF offenses and imposes obligations on financial institutions (including VASPs, as they are deemed FIs under CBB regulations) to report suspicious transactions.
Virtual asset service providers in Bahrain are regulated under the Central Bank of Bahrain Rulebook, specifically through the Crypto-Asset (CRA) Module in Volume 6 (Capital Markets), which sets out licensing categories, prudential, conduct, technology, and ongoing compliance requirements for crypto-asset service providers operating in or from Bahrain, alongside cross‑referenced modules (e.g., AML/CFT, outsourcing, conduct) in the wider
Module RA (Risk Management Module) - Specifically, RA-6 Virtual Asset Regulatory Framework: This module (introduced in 2019) is the cornerstone of VA regulation in Bahrain. It provides specific licensing requirements, operational standards, technological governance, and crucial AML/CFT measures tailored for VASPs. It categorizes virtual assets and defines various VASP activities (e.g., exchange, custody, portfolio management, advisory).
Module FC (Financial Crime) sets out core AML/CFT requirements for specific categories of CBB licensees, with separate FC Modules issued in different CBB Volumes (e.g., for conventional banks, Islamic banks, insurance licensees). VASPs, where regulated by the CBB, must comply with those FC provisions expressly applicable to their licensee category, including requirements on CDD, EDD, suspicious transaction reporting, record‑keeping, and internal controls, rather than a single generic FC module covering all CBB licensees uniformly.
Other relevant modules may include remuneration/compensation and controls/compliance modules, but the abbreviations RM (Remuneration Module) and HC (High-Level Controls Module) are not shown here as standard, generally applicable regulatory modules and appear system-specific or legacy.
Obtain name, permanent address, date of birth, nationality, and an official identification number (e.g., CPR/National ID, passport number).
Verify identity using reliable, independent source documents (e.g., government-issued photo ID, passport) and proof of address (e.g., utility bill).
Obtain legal name, legal form, proof of existence (e.g., certificate of incorporation), names of directors and authorized signatories, registered address, and details of principal business activity.
Identify and verify the identity of the beneficial owner(s) (any natural person owning or controlling 10% or more of shares/voting rights, or otherwise exercising control).
Understand the ownership and control structure.
Regulatory requirements concerning the “purpose and intended nature of the business relationship” are no longer treated as a one‑time, static checkbox but as a continuing, risk‑based customer due diligence obligation that must be understood, reassessed, and updated over the life of the relationship, in conjunction with beneficial ownership and ongoing transaction monitoring.
Understand the purpose and intended nature of the business relationship or the occasional transaction.
Assess and, on an ongoing risk‑based and event‑driven basis, reassess the customer’s risk profile using collected and updated customer information, including beneficial ownership information, as part of the institution’s customer due diligence obligations.
The regulation regarding 'Source of Funds and Source of Wealth (SoF/SoW)' in Bahrain has been updated, reflecting more robust risk assessment methodologies.
VASPs must perform due diligence on the source of funds and, where appropriate, the source of wealth, particularly for high-value transactions, high-risk customers, or when there are suspicions of ML/TF. This is especially critical for virtual assets due to their pseudonymous nature.
Regularly review existing customer information and update it as necessary.
Conduct ongoing monitoring of transactions to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile.
Pay close attention to complex, unusually large transactions, and all unusual patterns of transactions that have no apparent economic or lawful purpose.
Politically Exposed Persons (PEPs): For customers identified as PEPs, their family members, or close associates.
High‑risk jurisdictions are those on the FATF list of High‑Risk Jurisdictions Subject to a Call for Action (currently Iran, North Korea/DPRK and Myanmar/Burma), together with any other countries that the CBB designates as high‑risk based on its own assessment; countries on the FATF list of Jurisdictions Under Increased Monitoring (the grey list) should generally be treated as higher‑risk but are not formally labelled by FATF as “high‑risk jurisdictions subject to a call for action.”
High-Risk Business Activities: For customers engaged in activities deemed high-risk by the VASP or CBB.
Unusual or Large Transactions: Transactions that are particularly complex, unusually large, or exhibit unusual patterns.
Use of Mixers/Tumblers or Privacy Coins: Transactions involving these technologies should trigger EDD due to their inherent anonymity features.
Cross-border Virtual Asset Transfers: The CBB's Module RA-6 specifically highlights the need for heightened scrutiny for international transfers.
FATF’s “Travel Rule” under Recommendation 16 remains in force but was substantively revised in June 2025: R.16 has been retitled “Payment transparency,” its scope and data requirements for originator and beneficiary information have been expanded and clarified, and implementation of the updated standard is expected by end‑2030; virtual asset and crypto‑asset service provider Travel Rule obligations are now primarily addressed under Recommendation 15 rather than the revised R.16.
Obtain and hold required originator information (including the sender’s name and account / wallet identifier), and, consistent with applicable travel-rule style requirements, ensure that sufficient additional identifying data is collected (such as physical address OR a customer/national ID number OR date and place of birth), rather than mandating all of these elements for every transaction and value tier.
Obtain, hold, and transmit required beneficiary information (receiver's name/account number or wallet address) for applicable crypto transfers, rather than only obtaining and holding it internally.
Transmit this information to the beneficiary VASP; if the beneficiary is not a VASP, the Travel Rule transmission obligation does not require direct transmission to that non-VASP beneficiary.
Take reasonable measures to verify the identity of their customers (originator or beneficiary).
VASPs must establish and maintain systems to detect and report suspicious transactions.
Any employee who knows or suspects that funds are proceeds of a crime or are related to terrorist financing must report their suspicions internally to the VASP's Money Laundering Reporting Officer (MLRO).
The MLRO, after due consideration, must submit an STR to Bahrain's Financial Intelligence Unit (FIU).
It is strictly prohibited to inform the customer or any third party that an STR has been filed or that an investigation is underway.
STRs must be submitted promptly, without delay, once suspicion has been formed.
Unusual or complex virtual asset transactions that do not make economic sense.
Structuring transactions to evade Bank Secrecy Act (BSA) reporting thresholds remains prohibited and is a valid basis for suspicious activity reporting (SARs), but current guidance clarifies that institutions must file SARs when they reasonably suspect structuring to evade reporting requirements, rather than automatically filing based solely on a pattern of sub‑threshold transactions.
Frequent and rapid transfers of virtual assets, especially to and from multiple addresses.
Transactions involving mixers, tumblers, or privacy coins are considered high‑risk red flags that require enhanced due diligence and a documented legitimate justification, but they are no longer presumed to be illegitimate per se.
Large deposits of virtual assets followed by immediate withdrawal.
Customer refusal to provide requested CDD information or providing inconsistent information.
Transactions linked to identified illicit activities or sanctioned entities/individuals are subject to Bahrain’s AML/CFT framework under Decree-Law No. (4) of 2001 as amended, including by Decree-Law No. (36) of 2025, which introduced updated treatment of such transactions (including a good-faith defense for acquirers unaware of illicit origin) and strengthened measures against money laundering and terrorism financing.
Rapid changes in transaction patterns or sudden increases in activity without explanation.
All customer identification data, transaction records, and business correspondence must be retained for at least five years following the termination of the business relationship or after the date of an occasional transaction.
Records of STRs and any internal suspicious activity reports must also be kept for at least five years.
CDD Records: Copies of identification documents, verification data, beneficial ownership information, and risk assessments.
Transaction Records: Details of all virtual asset transactions, including dates, amounts, types of virtual assets, sender and receiver wallet addresses (or other identifiers), and any associated fiat currency conversions.
Internal Policies and Procedures: Records of all AML/CFT policies, procedures, and internal control manuals.
Training Records: Documentation of all AML/CFT training provided to staff.
Audit Reports: Records of internal and external AML/CFT audit findings.
STRs: Copies of all suspicious transaction reports filed.
Records must be kept in a manner that allows for easy retrieval by the CBB or other competent authorities upon request.
Proactive Licensing and Regulation: The CBB's early and clear VASP (Virtual Asset Service Provider) licensing framework means that entities operating within Bahrain's jurisdiction are largely required to be licensed and compliant from the outset. This reduces the scope for significant enforcement actions against unlicensed operators, as they are either licensed or prevented from operating.
General AML/CFT Enforcement: While the CBB regularly issues enforcement actions and fines against traditional financial institutions (banks, money exchangers, insurance companies) for AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism) deficiencies, these actions are typically related to general compliance failures across all financial services, not specifically tied to virtual assets. Public announcements rarely specify the type of assets involved unless it's a dedicated crypto violation.
CBB's Crypto-Asset Module: This comprehensive rulebook outlines the requirements for licensing, governance, capital, risk management, and AML/CFT for virtual asset service providers.
Licensing of Key Players (e.g., Rain Financial, Binance): These announcements highlight Bahrain's success in attracting and licensing major virtual asset entities.
URL (Example news coverage): https://www.prnewswire.com/news-releases/bahrains-rain-becomes-first-licensed-crypto-asset-platform-in-the-middle-east-300890666.html
Regulator: Central Bank of Bahrain (CBB)
Received a crypto-asset service provider authorization/licence under the relevant local regulatory regime, not a MiCA-style CASP licence.
Binance Bahrain’s regulatory position and permissions must now be understood in light of both the original Binance press releases and CBB announcements on its CASP/Category 4 license and PSP arrangements, and the Central Bank of Bahrain’s July 2025 stablecoin issuance and offering (SIO) framework, which imposes additional, specific approval and licensing requirements for stablecoin‑related and yield‑bearing stablecoin services.
The Central Bank of Bahrain’s news and announcement content is now hosted under its Media Center, especially the alerts/press releases section at https://www.cbb.gov.bh/media-center/ (and filtered views such as https://www.cbb.gov.bh/media-center/?type=alert), rather than the old /news-announcements/ path.
Hong Kong requires licensing for virtual asset trading platforms, now generally referred to as a Virtual Asset Trading Platform (VATP) licence, rather than a 'Virtual Asset Exchange Operator License'.
Operating a licensed virtual-asset exchange covers providing fiat-to-crypto, crypto-to-fiat, and crypto-to-crypto trading or conversion services, but it no longer necessarily requires maintaining an order book or directly matching buy and sell orders, because many regulated on‑/off‑ramp providers perform these functions via direct conversion or brokerage models without order matching.
Relevance: Directly applicable to cryptocurrency exchanges.
In Hong Kong, a separate virtual asset custodian licensing regime has been proposed and consultation conclusions have been published, but it is still pending implementation/commencement of the relevant legislation.
Covers: Safeguarding virtual assets or instruments enabling control over virtual assets on behalf of others. This includes holding private keys.
Relevance: Directly applicable to U.S. custody providers for cryptocurrencies and other virtual assets; not directly applicable to Bahraini (BH) custody providers, though potentially informative as comparative background.
Covers: Engaging in the business of buying, selling, or offering to buy or sell virtual assets on behalf of another person, or dealing as principal in virtual assets.
Relevance: Applicable to brokers, dealers, and trading platforms that facilitate transactions without necessarily operating a full exchange. This can also apply to OTC desks.
Covers: Managing portfolios of virtual assets on behalf of others.
Covers: Providing advice regarding virtual assets.
In Bahrain, virtual asset payment processors are not regulated as a distinct licensing category; instead, they fall within the broader, unified regime for Virtual Asset Service Providers (VASPs)/crypto‑asset service providers and are subject to the general AML/CFT and licensing requirements that apply to all VASPs.
If the payment processing involves "transferring virtual assets on behalf of another person," which is explicitly defined as a Virtual Asset Service, then a Virtual Asset License (likely a Virtual Asset Broker-Dealer license or a dedicated Virtual Asset Service Provider license, depending on the exact nature of the transfer and its relation to other VA activities) will be required.
If the service is solely processing fiat payments for virtual asset businesses (without directly handling or transferring virtual assets themselves), it might fall under a Payment Services license (regulated under CBB Rulebook, Volume 5 – Business and Market Practices, Module PS) rather than the Virtual Assets Module. However, given the broad definition of VA services, most payment processors dealing directly with virtual assets will likely fall under the VA Module.
The entity must be incorporated in Bahrain and have a physical presence.
The CBB requires substance, meaning local management and operational capabilities.
Minimum capital varies by the type of license and the specific services offered. These are specified in Appendix VA-1.2 of the Virtual Assets Module.
The VA-1.2 examples based on VA record control schedules and 38 CFR 3.12 do not apply to the Colorado Behavioral Health (BH) licensing jurisdiction, whose rules are maintained under Colorado state authority rather than federal VA regulations.
Under the Central Bank of Bahrain’s Crypto-Asset (CRA) Module, a full crypto-asset exchange operator (Category 4) must maintain a minimum paid-up capital of BHD 300,000 (approx. USD 795,000), not BHD 100,000. The BHD 100,000 minimum applies to Category 2 licensees (agent trading/custody/portfolio management), not to exchange operators.
Under the Central Bank of Bahrain’s crypto-asset service provider regime, a virtual asset custodian function falls under at least Category 2 (or higher), which requires a minimum paid-in capital of BHD 100,000 for Category 2, BHD 200,000 for Category 3, and BHD 300,000 for Category 4; thus, a blanket statement that the minimum is BHD 100,000 is incomplete and can be misleading because the capital requirement depends on the exact licensing category and business model.
Virtual Asset Broker-Dealer: Minimum BHD 50,000 (approx. USD 132,500) for basic activities, potentially higher.
Note: These are minimums and the CBB may require higher capital based on the business model, risk profile, and projected volumes.
Bahrain's AML/CTF and KYC framework was updated by Decree-Law No. (36) of 2025, enacted September 8, 2025, which amended Decree-Law No. (4) of 2001 to introduce stronger measures and enhanced preventative obligations.
Robust Know Your Customer (KYC) procedures for all clients, including enhanced due diligence for high-risk clients.
Implementation of a risk-based approach to AML/CFT.
Compliance with updated FATF (Financial Action Task Force) recommendations, including the expanded Recommendation 16 “Travel Rule” requirements for both virtual asset transfers and other cross‑border payments, as implemented in the relevant BH framework.
Designation of a CBB-approved Money Laundering Reporting Officer (MLRO).
Fit and Proper Requirements: Directors and certain senior management of CBB licensees must meet the CBB’s fit and proper criteria, demonstrating competence, integrity, and financial soundness. The CBB has streamlined its prior‑approval requirements and now places primary responsibility on the board and CEO to assess and ensure the suitability of senior management, while significant shareholders’ fitness and propriety are addressed under separate ownership and control provisions rather than this new common Fit and Proper Module.
Robust corporate governance framework, including clear roles, responsibilities, and internal controls.
Adequate staffing with relevant expertise.
Comprehensive framework for identifying, assessing, monitoring, and mitigating all relevant risks, including operational, market, credit, liquidity, and cybersecurity risks.
Bahrain's cloud infrastructure has experienced a significant disruption requiring months for restoration, while a Bahrain-based cybersecurity company continues to operate; the regulatory landscape is dynamic and involves active market growth.
Virtual asset firms are expected to maintain robust, secure IT systems, infrastructure, and security controls, with more explicit modern requirements focused on custody, governance, system resilience, and protection of client virtual assets and data.
Regular independent security audits and penetration testing.
Regulators expect organizations to maintain a documented, regularly tested business continuity and disaster recovery program—including detailed BCDR plans, defined continuity and recovery objectives (such as RTO/RPO), impact/risk analyses, governance, and ongoing review—rather than relying on static plans alone.
Clear and transparent disclosure of terms, conditions, and risks associated with virtual assets.
Fair and prompt handling of customer complaints.
Measures to prevent market manipulation and protect client assets.
Regular independent audits of financial statements and operational/internal controls are required only for institutions that meet or exceed the FDIC’s current Part 363 asset thresholds; institutions below the updated threshold (now $1 billion in assets) are no longer subject to a mandatory independent external audit requirement.
Periodic regulatory reporting to the CBB.
Prospective applicants are strongly encouraged to engage in preliminary discussions with the CBB to understand the requirements and gauge the feasibility of their proposed business model.
A detailed business plan outlining the proposed services, target market, operational model, governance structure, risk management, and financial projections (minimum of 3 years).
Information on the legal structure, shareholding, and ultimate beneficial owners.
CVs and "Fit and Proper" declarations for all directors and senior management.
Comprehensive AML/CFT policy and procedures manual.
IT infrastructure details, cybersecurity policies, and disaster recovery plans.
Financial resources documentation (proof of capital).
Internal control policies and procedures.
The CBB conducts a thorough review of the submitted documents.
This includes extensive due diligence on the principals, business model, and operational readiness.
The CBB may request additional information, clarifications, or amendments to the business plan or policies.
Key personnel (e.g., CEO, MLRO, Compliance Officer) may be required to attend interviews with CBB officials.
If all requirements are met, the CBB may grant an "in-principle" approval, subject to final conditions (e.g., establishing the physical office, appointing key personnel).
Once all conditions of the in-principle approval are satisfied, the CBB issues the final license.
Virtual Assets Module (VA): The dedicated module for virtual asset regulation, found within Volume 6.
Financial Crime Module (FC): Contains the comprehensive AML/CFT requirements applicable to all CBB licensees, including virtual asset service providers. It is also found within Volume 6.
Bahraini law and Central Bank of Bahrain (CBB) regulations require financial institutions, including VASPs, to comply with UN Security Council sanctions and with Bahrain’s own AML/CFT and terrorism‑financing measures, which include domestic designations and restrictions. This framework obliges institutions to freeze assets and prohibit transactions involving individuals and entities designated under applicable UN resolutions and corresponding Bahraini laws, ministerial orders, and CBB directives, not just UN lists alone.
Under the Central Bank of Bahrain Rulebook, Volume 6 (Capital Markets), the relevant sanctions/terrorism‑financing obligation is contained in Module AML: Anti‑Money Laundering & Combating of Financial Crime, not in a separate Module FC. The Module AML imposes requirements on Capital Market Service Providers to implement effective AML/CFT measures in line with FATF recommendations, including compliance with applicable UN Security Council resolutions on terrorism, proliferation, and related asset freezing; however, there is no Section FC‑1.1.1 (UN Sanctions) in a Volume 6 'Module FC (Financial Crime)' as cited.
The Central Bank of Bahrain’s Rulebook Volume 6 (Capital Markets) Crypto‑assets module has been amended as of 6 March 2023; the PDF linked in the original claim (Vol‑6‑CRA.pdf) reflects the August 2022 version and is no longer the current authoritative source.
OFAC (the U.S. Department of the Treasury’s Office of Foreign Assets Control) and the European Union each operate their own, separate sanctions regimes; there is no dedicated OFAC sanctions program targeting Bosnia and Herzegovina, and EU sanctions are adopted and enforced under EU law rather than by OFAC.
While Bahraini law does not directly mandate compliance with OFAC or EU sanctions for entities purely operating within Bahrain and not involving US or EU persons/funds, in practice, due to the global nature of financial services and cryptocurrencies, most VASPs operating internationally or dealing with international partners will screen against these lists.
Non-compliance with OFAC sanctions can lead to secondary sanctions, loss of access to the USD clearing system, and reputational damage for any entity (including a VASP) facilitating transactions with sanctioned parties, regardless of its location. Similarly, EU sanctions have extraterritorial reach in certain circumstances.
VASP Best Practice: Given the interconnectedness of the crypto ecosystem and the potential for severe penalties, prudent VASPs in Bahrain handling international transactions or onboarding international clients will incorporate OFAC, EU, and other major international sanctions lists into their screening processes.
Mandatory Screening: Licensed VASPs must screen all customers (initial onboarding and ongoing), beneficial owners, and transactions against
UN Sanctions Lists: Specifically the Consolidated List maintained by the UNSC 1267/1989/2253 ISIL (Da'esh) & Al-Qaida Sanctions Committee and the UNSC 1988 Taliban Sanctions Committee List, as well as other relevant UN sanctions lists.
National Sanctions Lists of Bahrain: This includes lists of designated terrorists and terrorist organizations issued by the Kingdom of Bahrain's competent authorities.
Ongoing Monitoring: Screening is not a one-time event. VASPs must conduct ongoing monitoring to identify if existing clients or parties to transactions subsequently appear on sanctions lists.
Technology Solutions: VASPs are expected to use reliable technology solutions for efficient and accurate screening.
Sanctions Compliance: Transactions involving jurisdictions subject to comprehensive UN (and implicitly, OFAC/EU) sanctions (e.g., Iran, North Korea, Syria, certain regions of Russia) are effectively prohibited due to sanctions regimes. VASPs must block or reject such transactions and report them.
Risk-Based Approach (FATF Recommendations): VASPs must implement a risk-based approach to customer due diligence (CDD). Higher-risk jurisdictions (e.g., those identified by FATF as having strategic AML/CFT deficiencies) will trigger enhanced due diligence measures. If the risks cannot be mitigated, the VASP may choose to restrict or prohibit business relationships with customers or transactions originating from/destined for such regions.
Travel Rule: The CBB has implemented the FATF's "Travel Rule," requiring VASPs to obtain and transmit originator and beneficiary information for crypto transfers above a certain threshold. This enhances the ability to identify cross-border transactions involving high-risk jurisdictions or sanctioned entities.
Imposition of specific conditions on the VASP's license.
Imprisonment for individuals found responsible for serious AML/CFT breaches, including facilitating sanctioned transactions.
CBB Law (Law No. 64 of 2006): Grants the CBB powers to impose administrative sanctions and refer criminal offenses to the Public Prosecution.
Law No. 4 of 2001 (as amended) concerning the Prevention and Prohibition of the Laundering of Money and Financing of Terrorism: Defines criminal offenses and associated penalties.
URL for CBB Law: CBB Law No. 64 of 2006 (See Part 5, Offences and Penalties)
United Nations Security Council Consolidated List: This list is universally applied by Bahrain.
Kingdom of Bahrain's National Terrorism Lists: Bahrain maintains national lists of individuals and entities designated as terrorists or terrorist organizations, in accordance with Law No. 54 of 2006 regarding the Proscription of Terrorist and Terrorist Entities. Financial institutions, including VASPs, are required to screen against these lists. These lists are typically disseminated to regulated entities through CBB circulars.
Note: These lists are not publicly published online in a single consolidated database for easy public access, but rather communicated confidentially to licensed institutions by the CBB or other competent authorities.
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Individuals: Bahrain does not levy a personal income tax. Consequently, there is no capital gains tax on the profit derived from the sale or disposal of cryptocurrency for individuals.
Bahrain currently does not impose a general corporate income tax on most non‑oil‑and‑gas businesses, and there is no standalone capital gains tax on such businesses’ profits from crypto asset disposals; however, Bahrain has enacted a new 10% Corporate Income Tax regime (on taxable income exceeding BHD 200,000) that is scheduled to apply to Bahrain businesses from 1 January 2027, which will introduce broad-based corporate taxation going forward.
Individuals: As there is no personal income tax in Bahrain, income generated from cryptocurrency activities (such as mining rewards, staking rewards, interest from crypto lending, or trading profits) is not subject to income tax for individuals.
Bahrain introduced Value Added Tax (VAT) at a standard rate of 5% on 1 January 2019 and subsequently increased the standard VAT rate to 10% with effect from 1 January 2022.
Treatment of Crypto: The National Bureau for Revenue (NBR) is the tax authority responsible for VAT. The VAT treatment of virtual assets in Bahrain generally follows international principles, but specific detailed guidance from the NBR on all nuances of crypto assets is not extensively published.
Services related to Crypto: Generally, the supply of services related to virtual assets, such as exchange fees, custodian fees, transaction fees charged by crypto-asset service providers (CASPs), or other commission-based services, are likely to be subject to VAT at the standard 10% rate, provided the service is supplied in Bahrain by a VAT-registered entity.
Supply of the Virtual Asset Itself: The treatment of the underlying virtual asset (e.g., Bitcoin, Ethereum) itself is more complex. Many jurisdictions consider the supply of virtual assets to be either
Exempt from VAT: If treated as a financial service or a form of currency.
In Bahrain, the direct transfer of virtual assets is subject to VAT and not exempt; only ancillary service fees remain taxable.
Tax Reporting: Since there is no capital gains tax or income tax on crypto for most individuals and businesses, there are no specific tax-related reporting requirements to the National Bureau for Revenue (NBR) regarding crypto holdings or transactions.
It is crucial to distinguish between tax reporting and regulatory reporting.
Bahrain has a robust regulatory framework for crypto assets issued by the Central Bank of Bahrain (CBB). Licensed Crypto-Asset Service Providers (CASPs) operating in Bahrain are subject to extensive Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regulations.
These regulations require CASPs to conduct thorough customer due diligence (KYC), monitor transactions, report suspicious activities, and maintain detailed records of all transactions and customer information.
Individuals and businesses interacting with licensed CASPs must provide identification and transaction details for KYC/AML/CFT purposes; while this information is collected primarily for financial crime prevention and supervisory oversight under MiCA, TFR and AMLR, it can also be accessed and used by other competent authorities, including tax authorities, under the wider EU and national legal framework (e.g. DAC8 and domestic tax laws), so it cannot be said to be ‘not for tax assessment’.
Bahrain still has no personal income or capital gains tax regime for individuals and no crypto‑specific tax law, but since the introduction of a corporate income tax (CIT) regime, corporate capital gains—including in principle gains on crypto or virtual assets—are now taxed under that general CIT framework rather than being entirely untaxed.
The primary legislative and regulatory framework specific to crypto assets in Bahrain is still issued by the Central Bank of Bahrain (CBB) through its crypto-asset rules (e.g., the Crypto-Asset Module in Volume 6 of the CBB Rulebook) for licensed crypto-asset service providers, covering licensing, governance, risk management, cybersecurity, and AML/CFT requirements; however, this framework has since been expanded by an additional CBB stablecoin regulatory framework that now also governs the licensing, issuance, governance, and reserve requirements of stablecoins, so the overall crypto-asset regulatory landscape is no longer limited to CASP-focused rules, while remaining regulatory rather than tax-specific.
The NBR is responsible for the administration and collection of VAT in Bahrain. While specific detailed guidance on crypto VAT may not be prominently featured, the general VAT law and guidance would apply.
Central Bank of Bahrain (CBB) - For Crypto Asset Regulations
Core regulation for crypto-asset services (including custody and platform-type activities) is set out in CBB Rulebook Volume 6 – Capital Markets, primarily in the Crypto-Assets Module (CRA), with additional specialised modules such as the Stablecoin Issuance and Offering (SIO) Module governing specific activities like stablecoin issuance and offerings.
The CBB Rulebooks are now primarily hosted and maintained on the Thomson Reuters–powered platform at cbben.thomsonreuters.com (accessed via links from the CBB Laws & Regulations/Rulebook section), rather than being directly and comprehensively published at https://www.cbb.gov.bh/rulebooks/ as a standalone main page of substantive rulebook content.
The Central Bank of Bahrain's current cyber security rulebook, effective July 2025, has superseded the older CRY module references (CRY-1.1.1, CRY-1.2.1, CRY-1.3.1) with updated requirements under the 'Cyber Security Requirements' module.
Authorization: Obtain a license from the CBB.
Directors and senior management of CBB licensees must meet the Central Bank of Bahrain’s fit and proper criteria as set out in the standalone Fit and Proper Requirements Module (Module FP), rather than EN-1.2.1.
Minimum Capital: Maintain adequate financial resources. For a Class 4 (Custody) license, the minimum paid-up capital is BD 50,000 (approx. USD 132,600), plus additional operational risk capital requirements based on a risk assessment (CR-1.3.1).
Operational requirements for robust systems, controls, risk management, and internal audit functions in Bahrain custody have been updated under the 2026 CBB requirements and modern IIA standards, superseding the older GR-1.1.1, GR-1.1.2, RM-1.1.1 codes.
General company registration in Bahrain typically requires a description or outline of proposed business activities; however, detailed operational procedures for custody, security measures, and disaster recovery plans are not universally required for all businesses, but may be specific to certain highly regulated sectors.
Absolute Segregation: Crypto-asset platform operators must ensure that client crypto-assets are held separate from their own crypto-assets and are clearly identifiable as client assets (CRY-5.1.1).
No Commingling: Client crypto-assets must not be commingled with the operator's proprietary assets (CRY-5.1.2).
Trust Arrangement: Client crypto-assets must be held in trust for the clients (CRY-5.1.3).
Prohibition on Use: Operators are prohibited from using client crypto-assets for their own account or for the benefit of any other client without explicit, written client consent and regulatory approval (CRY-5.1.4).
Reconciliation: Regular reconciliation of client crypto-assets with internal records is mandated (CRY-5.1.5).
A crypto-asset platform operator should maintain appropriate risk management and, where required by its business model, adequate insurance or equivalent financial protections for client-asset safekeeping risks such as cyber incidents, theft, fraud, and operational failures; current U.S. regulatory guidance emphasizes safe-and-sound operations and broader risk controls rather than a universal standalone insurance mandate.
The CBB expects the coverage to be commensurate with the scale and nature of the operator's business and the value of assets under custody. Specific monetary amounts are not typically fixed in the rulebook but are assessed on a case-by-case, risk-based approach.
Robust Security: Operators must implement robust security measures for the custody of crypto-assets (CRY-4.2.1).
Significant Proportion in Cold Storage: This includes the use of cold storage (offline storage) for a significant proportion of client assets (CRY-4.2.1).
Policy & Procedures: Operators are required to have documented policies and procedures for determining the appropriate proportion of assets to be held in cold storage, taking into account factors such as asset type, liquidity needs, and the overall risk profile (CRY-4.2.2).
Key Management: Secure key generation, storage, and management procedures are also critical (CRY-4.2.3).
Module Reference: Module CRY establishes the requirements.
In Bahrain, there is no specific "Class 4 Custody License" or "Module CRY" for crypto-assets. Crypto-asset custody is a regulated crypto-asset service under the Central Bank of Bahrain (CBB) Rulebook, Volume 6 – Crypto-Asset Module (CRA). Only entities holding a CBB crypto-asset service provider licence in the relevant category (e.g., Category 2 or Category 3, which explicitly include "crypto-asset custody") may legally provide custody of accepted crypto-assets within or from Bahrain. The CBB is the licensing and supervisory authority, and licensees must meet requirements on capital, governance, operational controls, cybersecurity, and client asset protection, but the law does not use the separate legal label "qualified custodian" nor a "Class 4 Custody License" for this purpose.
Continuous Updates: The CBB's approach is to regularly review and update its rulebooks. Any amendments or new directives would be communicated through CBB circulars or updates to the relevant modules (e.g., updates to Module CRY).
In the Central Bank of Bahrain Rulebook Volume 6 (Capital Markets), the Crypto-Asset Module (CRA) remains in force and governs crypto-asset services, but stablecoin activities are now subject to an additional, dedicated Stablecoin Issuance and Offering (SIO) Module that operates alongside the CRA rather than being covered solely under the CRA.
In Bahrain's CBB Rulebook, electronic money and e-money activities for conventional banks are covered under Module OM-3 ('Electronic Money and Electronic Banking Activities') within the Operational Risk Management framework — not under a standalone 'Volume 1 – Conventional Banks' section with an 'EMO – E-Money Module' page.
For Bahraini fiat‑backed stablecoins, the primary regime is now the dedicated Stablecoin Issuance and Offering (SIO) Module under CBB Rulebook Volume 6; the Volume 1 E‑Money Module (EMO) may still apply only where a licensed conventional bank issues a stablecoin that also meets the definition of e‑money, but it is no longer the main or default framework for stablecoin regulation.
Asset-Referenced Tokens: This is the most common classification for stablecoins under the CRA Module. These are defined as tokens that aim to maintain a stable value by referencing other assets (e.g., fiat currency, a basket of currencies, commodities). The CRA Module specifically addresses the requirements for issuers of such tokens.
Payment Tokens: While not a distinct regulatory classification, stablecoins are primarily envisioned and regulated as instruments that facilitate payments, particularly when they are fiat-backed and meet the criteria of asset-referenced or e-money tokens.
CRA-1.1.2: Defines crypto-assets and includes "stablecoins."
CRA-1.2.1: Outlines the CBB's approach to classifying crypto-assets based on their functionality and characteristics.
Full Backing: Issuers must ensure that their stablecoins are fully backed by reserve assets.
Segregation: The reserve assets must be held separately from the issuer's operational funds and other assets, ensuring they are bankruptcy-remote.
CBB-Licensed Custodian: The reserve assets must be held in custody by a CBB-licensed custodian (or a custodian approved by the CBB, adhering to CBB's standards).
Under the GENIUS Act framework for U.S. payment stablecoins, issuers must provide independent third‑party monthly reserve attestations and, for large issuers, annual PCAOB‑standard financial statement audits; these requirements focus on verifying reserve existence and composition and enhancing transparency, but comprehensive, in‑depth audits are not uniform across all issuers and occur annually rather than on the same regular cadence as attestations.
Permitted Reserve Assets: The CBB specifies the types of assets that can constitute reserves, typically highly liquid, low-risk assets like fiat currency (held in segregated bank accounts), short-term government securities, or other highly rated financial instruments.
CRA-B.1.1: Outlines general business conduct requirements for licensees, including safeguarding client assets.
Crypto-Asset Services Provider (CASP) License: Issuing crypto-assets (including stablecoins) is one of the regulated activities under the CRA Module. Entities wishing to perform this function must obtain a CASP license from the CBB.
Licensing Requirements: Licensees must meet rigorous requirements concerning
Capital: Minimum capital requirements are stipulated.
Governance: Robust corporate governance, risk management frameworks, and internal controls.
Fit and Proper: Directors, senior management, and significant shareholders must pass "fit and proper" assessments.
AML/CFT: Strict adherence to Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regulations.
Cybersecurity: Robust cybersecurity frameworks and measures.
Business Plan: A comprehensive business plan detailing operations, technology, and compliance.
FinTech Regulatory Sandbox: Bahrain offers a FinTech Regulatory Sandbox, which allows innovative FinTech firms (including those dealing with stablecoins) to test their solutions in a live environment with tailored regulatory requirements for a limited period before full licensing.
CRA-2.1.1: Lists the categories of crypto-asset services that require a license (including "issuing crypto-assets").
CRA-A.1.1 sets out the scope of application and key definitions under the EU Cyber Resilience Act; it does not establish general business licensing requirements for BH stablecoin issuers.
CRA-A.2: Details the application procedures.
FRS – FinTech Regulatory Sandbox Module (Volume 6): Provides the framework for the sandbox.
Issuers of payment stablecoins are generally required to provide holders with a clear, enforceable right to redeem their stablecoins for the reference currency at par value, subject to the applicable stablecoin regime and licensing framework.
Clear Policies: Issuers must have clear, transparent, and enforceable policies and procedures for redemption, outlining the process, timelines, and any applicable fees (which should be reasonable).
Liquidity Management: Issuers must maintain sufficient liquidity in their reserve assets to meet potential redemption demands promptly.
While specific sections might not explicitly say "redemption rights," these rights are an implicit requirement derived from the full backing, transparency, and consumer protection principles applied to asset-referenced tokens. The CBB's general consumer protection framework (e.g., BP – Business Principles Module, Volume 6) would also apply.
CRA-B.1.1: General business conduct rules for protecting client interests.
Implicit Exclusion: The requirements for "asset-referenced tokens" necessitate holding actual, segregated reserve assets. Algorithmic stablecoins that are unbacked or rely on volatile crypto-collateral without robust over-collateralization and independent custody would not meet these criteria.
Risk Aversion: Post-Terra/Luna, regulators globally have become highly cautious of algorithmic stablecoins. The CBB's framework, predating some of these failures, already prioritized asset-backed stability, reflecting a prudent approach to risk.
CRA-3.3.1 (and subsequent sections related to reserves): The explicit requirements for physical reserves held by custodians implicitly exclude algorithmic designs that lack such backing.
The CBB has conducted notable proofs-of-concept and pilots demonstrating interest in digital currency innovation. In particular, starting from 2020 it collaborated with J.P. Morgan and Bank ABC on pilots and tests for real-time cross-border payments using JPM Coin, which culminated in a successful test with ALBA and the subsequent soft launch of a commercial service in 2023. However, there is no verifiable evidence that the CBB partnered with OpenNode or ran a Bitcoin payment processing pilot for the Kingdom.
Bahrain is exploring and designing a potential retail CBDC (often referred to as a digital dinar) as part of its broader digitalisation and payments strategy, but no retail CBDC has yet been launched; therefore it is not currently competing with or displacing private BHD‑pegged stablecoins, although such competition could arise depending on the eventual CBDC design and implementation.
The CBB's digital asset ecosystem includes active partnerships with regulated private stablecoins (e.g., AX Coin) for wallet infrastructure and digital payment solutions, moving beyond exploration to tangible commercial collaboration.
Framework Evolution: The insights gained from CBDC exploration are likely to inform and further refine the broader digital asset regulatory framework, including for stablecoins.
Monitor formal regulatory frameworks, supervisory guidance, and implementation rules on FinTech, blockchain, and digital currency — not just pilot announcements — as authorities have largely moved from experimental pilots to enforceable regimes, especially for stablecoins and other payment-focused digital assets.
Introduction of a Licensing Scheme: The CBB will require stablecoin issuers to obtain a license before launching their tokens, ensuring they meet stringent operational and reserve requirements.
Reserve Backing Requirement: Issuers must maintain 100% reserve backing of the stablecoin with a government-issued currency or a similarly secure asset.
Transparency and Reporting: Issuers are obligated to provide regular audits and transparent reporting on the reserves supporting the stablecoin, ensuring ongoing oversight by the CBB.
Application Process: Applicants must submit a detailed business plan, risk management strategy, and proof of compliance with the CBB’s operational standards.
Compliance with Shariah Principles: For stablecoins targeting the Islamic finance market, issuers must demonstrate compliance with Shariah principles, as highlighted in the CBB's regulatory provisions.
Know Your Customer (KYC): Issuers must implement robust KYC procedures to verify the identity of users and monitor transactions for suspicious activity.
Anti-Money Laundering (AML): Continuous monitoring and reporting mechanisms are required to detect and prevent money laundering and terrorist financing risks.
Non-Compliance Penalties: The CBB reserves the right to impose fines, suspend licenses, or take legal action against issuers failing to adhere to the regulatory framework.
Public Disclosures: Instances of non-compliance may result in public notifications to safeguard market participants and maintain regulatory integrity.
Tax Implications: The CBB has indicated that stablecoin transactions will be subject to existing tax laws, including potential capital gains tax on profits derived from stablecoin holdings.
Operational Risks: Despite the robust framework, operational risks such as technological failures or cybersecurity threats remain a concern for stablecoin issuers.
Market Adoption: The success of the framework hinges on widespread adoption by both local and international entities, which may be influenced by regulatory clarity and market confidence.
Central Bank of Bahrain Issues Framework for Regulating Stablecoin Issuance
Stablecoin Regulation in Bahrain: A Comprehensive Guide
Bahrain Launches Pioneering Regulatory Framework
Framework 'new era of legitimacy' for stablecoins in Bahrain
Securities classification data collection in progress.
Central Bank of Bahrain (CBB), established on September 6, 2006 (Source).
Central Bank of Bahrain and Financial Institutions Law 2006 (CBB Law), Decree No. 64 of 2006, establishing the CBB as the single integrated regulator for Bahrain's financial industry (Source).
The CBB aligns with FATF and Moneyval standards, though specific guidance on virtual assets is evolving. The CBB’s role extends to ensuring compliance with international AML/CFT standards (Source).
License Requirement: No specific crypto license exists; any service provider must obtain a general financial services license from the CBB if they engage in activities such as money transmission, payment systems, or virtual currency exchanges (Source).
Money transmission, digital asset exchange, custodial services for crypto assets.
Customer Due Diligence (CDD): Mandatory identification and verification of customers before engaging in any crypto-related transactions (Source).
Enhanced Due Diligence (EDD): Required for high-risk clients, including those involved in large or unusual transactions (Source).
Suspicious Transaction Reporting (STR): Obligation to report any suspicious activity related to virtual asset transactions to the CBB (Source).
Record Retention: Detailed records of all crypto transactions must be maintained for a minimum period as stipulated by the CBB’s AML guidelines (Source).
Beneficial Ownership & PEP Screening: Identification and screening of beneficial owners, including checks against Politically Exposed Persons (PEPs) lists (Source).
Central Bank of Bahrain's Museum Opening Hours and Details
CBB Governor Participation in Climate Forum 2026
CBB Treasury Bills Oversubscription October 2026
Outcome: Received a Crypto-Asset Service Provider license. This is not an enforcement action but demonstrates the active regulatory environment.
Likely regulatory action expected around 2026-11-26
Based on 175 historical regulatory events for Bahrain, averaging every 42 days, with increasing regulatory activity.
Central Bank of Bahrain (CBB) Official Website: https://www.cbb.gov.bh/
Regulatory Body: Central Bank of Bahrain (CBB)
Definition: A "qualified custodian" in Bahrain, for the purpose of crypto-assets, is essentially a financial institution or entity that has obtained a Class 4 Custody License from the Central Bank of Bahrain under Module CRY. By meeting the stringent licensing requirements (capital, governance, operational controls, security, segregation, etc.), the CBB deems the entity "qualified" to provide crypto-asset custody services. The CBB itself is the "qualifying" authority.
Continuous Updates: The CBB's approach is to regularly review and update its rulebooks. Any amendments or new directives would be communicated through CBB circulars or updates to the relevant modules (e.g., updates to Module CRY).
Ongoing Monitoring: Screening is not a one-time event. VASPs must conduct ongoing monitoring to identify if existing clients or parties to transactions subsequently appear on sanctions lists.
Travel Rule: The CBB has implemented the FATF's "Travel Rule," requiring VASPs to obtain and transmit originator and beneficiary information for crypto transfers above a certain threshold. This enhances the ability to identify cross-border transactions involving high-risk jurisdictions or sanctioned entities.
Prospectus Requirements: Issuers must generally prepare and publish a prospectus (offering document) that provides comprehensive information about the issuer, the token, the underlying project, risks, and financial details. This prospectus must be approved by the CBB.
Proactive Regulation: The CBB's comprehensive and proactive regulatory framework, including the Regulatory Sandbox, aims to guide firms towards compliance from the outset rather than punishing after the fact.
Focus on Licensed Entities: The CBB primarily engages with and supervises licensed entities. Any firm attempting to operate an unlicensed STO in Bahrain would likely face immediate intervention, including being prohibited from operating, without necessarily leading to a widely publicized "enforcement action" in the traditional sense.
Fines: Significant monetary penalties.
Sanctions: Restrictions on business activities or individuals.
CBB Rulebook Volume 1 (Conventional Banks) – E-Money Module (EMO) (Relevant if a stablecoin qualifies as e-money)
Asset-Referenced Tokens: This is the most common classification for stablecoins under the CRA Module. These are defined as tokens that aim to maintain a stable value by referencing other assets (e.g., fiat currency, a basket of currencies, commodities). The CRA Module specifically addresses the requirements for issuers of such tokens.
E-Money Tokens: If a stablecoin meets the definition of electronic money (i.e., electronically stored monetary value representing a claim on the issuer, issued on receipt of funds for the purpose of making payment transactions, and accepted by persons other than the e-money issuer), it might be regulated under the E-Money Module (EMO) of the CBB Rulebook, typically issued by licensed e-money institutions. This would be for fiat-backed stablecoins pegged 1:1 to a single fiat currency.
CRA-1.1.2: Defines crypto-assets and includes "stablecoins."
EMO-A.1.1: Defines "e-money."
Segregation: The reserve assets must be held separately from the issuer's operational funds and other assets, ensuring they are bankruptcy-remote.
CBB-Licensed Custodian: The reserve assets must be held in custody by a CBB-licensed custodian (or a custodian approved by the CBB, adhering to CBB's standards).
Permitted Reserve Assets: The CBB specifies the types of assets that can constitute reserves, typically highly liquid, low-risk assets like fiat currency (held in segregated bank accounts), short-term government securities, or other highly rated financial instruments.
Exploratory Phase: The CBB has conducted various proofs-of-concept and pilots. For instance, in 2021, the CBB collaborated with JP Morgan and Bank ABC on a successful pilot for real-time cross-border payment using JPM Coin. In 2022, it partnered with OpenNode to test Bitcoin payment processing solutions for the Kingdom. This indicates a strong interest in digital currency innovation.
Comprehensive and Proactive: Bahrain has adopted a comprehensive regulatory framework for virtual asset services. It was one of the first countries globally to implement a dedicated, holistic licensing and supervisory regime for virtual asset businesses, moving beyond just AML/CFT concerns to cover market conduct, consumer protection, governance, and technology risks.
Central Bank of Bahrain (CBB): The CBB is the sole regulatory authority responsible for licensing and supervising virtual asset service providers (VASPs) and activities in Bahrain.
Treatment of Crypto: The National Bureau for Revenue (NBR) is the tax authority responsible for VAT. The VAT treatment of virtual assets in Bahrain generally follows international principles, but specific detailed guidance from the NBR on all nuances of crypto assets is not extensively published.
The primary legislative and regulatory framework specific to crypto assets comes from the Central Bank of Bahrain (CBB), which has issued comprehensive regulations for Crypto-Asset Service Providers (CASPs). These regulations cover licensing, governance, risk management, cybersecurity, and AML/CFT requirements, but they are regulatory, not tax-specific.
Adopted: Yes, the principles of the FATF Travel Rule are adopted and integrated into Bahrain's regulatory framework for Crypto-Asset Service Providers (CASPs) licensed by the CBB. While not explicitly termed "Travel Rule" in every section, the requirements for originator and beneficiary information collection and transmission are mandated.
Legislation/Guidance: The primary regulatory framework is the CBB Rulebook, Volume 6 – Capital Markets, Crypto-assets (CA) Module.
The CBB's comprehensive regulatory framework for crypto-assets came into effect in 2019. This framework included stringent AML/CFT obligations for CASPs, encompassing requirements aligned with the Travel Rule principles.
The CBB's framework covers all entities licensed as Crypto-Asset Service Providers (CASPs). The CA Module defines various regulated crypto-asset activities, including:
Monetary Fines: Substantial financial penalties imposed on the CASP and/or its senior management.
Administrative Sanctions: Public reprimands, warnings, and specific directives to rectify deficiencies.
Individual Accountability: Senior management and board members can be held personally accountable and face individual sanctions, including disqualification from holding similar positions.
Primary Regulatory Body: The Central Bank of Bahrain (CBB) is the sole regulatory authority for crypto-asset custody services in Bahrain CBB Official Website
Key Management (CRY-4.2.3): Secure key generation, storage, and management procedures are required. However, Module CRY does not prescribe specific technical standards for private key management (e.g., multi-signature, hardware security modules, multi-party computation). This is a notable gap in the regulatory framework CBB Rulebook CRY-4.2.3
Continuous Updates: The CBB regularly reviews and updates its rulebooks. Amendments are communicated through CBB circulars or updates to the relevant modules (e.g., updates to Module CRY). Operators must monitor the CBB website for the latest version CBB Circulars Page
Practical Landscape: As of 2026, there is limited publicly available data on the number of Class 4 Custody license holders under Module CRY. The CBB has not published a public register of licensed crypto-asset platform operators. Enforcement actions or public guidance from the CBB specific to Module CRY are also not readily available in the public domain CBB Licensed Entities List
Relevance to Custody: Module CSP addresses stablecoin issuance and requires that reserve assets backing stablecoins be held in custody by a CBB-licensed custodian (or a custodian approved by the CBB, adhering to CBB standards). This module imposes additional segregation requirements for reserve assets, ensuring they are bankruptcy-remote from the issuer’s operational funds CBB Rulebook CSP Module
CBB-Licensed Custodian Requirement: For stablecoin reserves, the custodian must be licensed under Module CRY (Class 4 Custody) or specifically approved by the CBB. This intersects with the general custody framework but is not the primary focus of Module CRY CBB Rulebook CSP Module
Fines: Significant monetary penalties CBB Rulebook
Sanctions: Restrictions on business activities or individuals CBB Rulebook
Regulatory Body: Central Bank of Bahrain (CBB) CBB Rulebooks
To operate in Bahrain's financial market, entities offering cryptocurrency services must obtain a license from the CBB. The licensing process involves demonstrating compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. Banking Regulations: Staying Compliant... - FasterCapital
Financial institutions in Bahrain are required to implement robust Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures. These include customer due diligence, ongoing monitoring of transactions, and reporting suspicious activities to the relevant authorities. Banking Regulation 2026 - Bahrain | Global Practice Guides
Cryptocurrency holdings and transactions in Bahrain are subject to income tax based on the capital gains derived from such activities. The exact tax rates and treatment depend on the classification of the cryptocurrency under local tax laws, which are periodically reviewed by the Bahrain Ministry of Finance. REAB - Investor life hacks - Specifics of banking in Bahrain
One significant gap is the evolving nature of cryptocurrency technology, which can outpace regulatory updates, potentially leaving vulnerabilities in compliance frameworks. Additionally, cross-border transactions pose risks related to inconsistent international regulations and enforcement capabilities. How to open a bank account in Bahrain - Bahrain Guide - Expat.com
Banking Regulation 2026 - Bahrain | Global Practice Guides
Banking Regulation and Supervision in Bahrain
REAB - Investor life hacks - Specifics of banking in Bahrain
How to open a bank account in Bahrain - Bahrain Guide - Expat.com
Central Bank of Bahrain (CBB), established on September 6, 2006 (Source).
Central Bank of Bahrain | Home
Central Bank of Bahrain's Museum Opening Hours and Details
Central Bank of Bahrain (CBB): Responsible for maintaining monetary and financial stability; also acts as the single integrated regulator of Bahrain's financial industry. Website: https://www.cbb.gov.bh/
Central Bank of Bahrain Enhances Fintech Regulatory Sandbox to...
Regulatory guidelines are periodically updated to align with global trends in digital finance, ensuring a balanced approach that supports innovation while safeguarding against illicit activities. REAB - Investor life hacks - Specifics of banking in Bahrain
These requirements mandate comprehensive customer due diligence, ongoing monitoring of transaction patterns, and reporting of suspicious activities to regulatory authorities. New Era for Bahrain Banking: Secured... - Al Tamimi & Company
Technological Advancements: Rapid technological changes in the cryptocurrency space necessitate agile regulatory responses to address emerging risks effectively. ICICI Bank Bahrain | Personal, Business, Corporate and NRI Banking...
Bahrain Banking / Finance | Click Bahrain
New Era for Bahrain Banking: Secured... - Al Tamimi & Company
Bahrain Banking: Regulatory Framework - MarcoPolis
Bahrain - Banking - Expat Focus
ICICI Bank Bahrain | Personal, Business, Corporate and NRI Banking...
Banking License BL in Bahrain | N5Deal
Central Bank of Bahrain (CBB): Established by the Central Bank of Bahrain and Financial Institutions Law 2006, the CBB is the primary regulator overseeing Bahrain's financial sector, including FinTech innovations. https://www.cbb.gov.bh/
Central Bank of Bahrain and Financial Institutions Law 2006: This foundational legislation grants the CBB authority over Bahrain's financial institutions, including those involved in FinTech and cryptocurrency activities. https://www.cbb.gov.bh/
The CBB has not issued explicit tax guidance for virtual assets or cryptocurrencies. Consequently, any taxation would be governed by Bahrain’s general tax laws, potentially under income tax or capital gains, pending further regulatory clarification. https://www.cbb.gov.bh/page/3/
- The CBB's participation in GFIN suggests potential for cross-border testing, though specific crypto-related frameworks are under-defined. Central Bank of Bahrain Enhances Fintech Regulatory Sandbox to...
International Association of Insurance Supervisors (IAIS) Core Principles: Adopted by Bahrain to align insurance regulatory frameworks, indirectly influencing digital asset oversight. https://www.cbb.gov.bh/insurance/
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